First Nat. Bank of Rocky Ford v. Lewis
Decision Date | 12 January 1914 |
Citation | 139 P. 1102,57 Colo. 124 |
Parties | FIRST NAT. BANK OF ROCKY FORD v. LEWIS. |
Court | Colorado Supreme Court |
Rehearing Denied April 6, 1914.
Error to District Court, Otero County; J. E. Rizer, Judge.
Action by the First National Bank of Rocky Ford. Colo., against G W. Lewis. Judgment for defendant, and plaintiff brings error. Affirmed.
Adams & Gast, of Pueblo, for plaintiff in error.
J. H Voorhees, of Pueblo, for defendant in error.
The defendant in error Lewis executed and delivered his promissory note for $1500.00 to the State Bank of Rocky Ford which was assigned after maturity to the First National Bank of Rocky Ford, plaintiff in error, who later brought suit upon it against Lewis to recover judgment for the amount then due.
The circumstances surrounding the controversy are in the main as follows: The State Bank of Rocky Ford, being indebted to the First National Bank of that city in the sum of $1051.45, balance on exchange, gave the latter a draft for the amount on a Pueblo bank, which draft was dishonored and returned unpaid to the First National Bank of Rocky Ford. Upon demand, on December 30th, 1907, the State Bank, being unable to pay the draft, asked for further time and turned over the Lewis note as collateral security for the debt. The record shows that the State Bank, on the day the Lewis note was turned over to the First National Bank of Rocky Ford, had committed an act of insolvency through failure to pay and discharge its draft; that it was actually then insolvent, and closed finally on the next day; that on the second day thereafter it was placed in the hands of the State Bank Commissioner and subsequently a receiver was appointed. At that time Lewis had on deposit in the bank a sum in excess of the amount due on his note, and this he pleaded in set-off. The note was drawn with the payee blank, and when it came into the hands of the plaintiff in error its name was inserted as payee for purposes of suit. Upon trial to the court judgment was rendered in favor of defendant, which the bank brings here for review.
The main question presented is, was the set-off properly allowed? Section 62 of the Code of Civil Procedure, R. S. 1908, provides, among other things, that, secondly, the answer shall contain a statement of any new matter constituting a defense, or counterclaim. Section 63 thereof reads:
Sections 3 and 4 provide:
'Every action shall be prosecuted in the name of the real party in interest, except as otherwise provided in this act.'
'In the case of an assignment of a thing in action, the action by the assignee shall be without prejudice to any set-off or other defense existing at the time of, or before notice of assignment; but this section shall not apply to a negotiable promissory note or bill of exchange transferred in good faith and upon good consideration before due.'
Counterclaim, as used in section 63, supra, is a broader term than either set-off or recoupment, and includes both of them. 25 Ency. Law, page 570; St. Louis National Bank v. Gay, 101 Cal. 286, 35 P. 876. This section expressly and explicitly gives the right to interpose this set-off against the original payee, and section 4, supra, preserves it for application in defense of just such an action as the one now before us, namely, a suit upon a promissory note by an assignee, taking it after due. This holding is not only made possible but irresistible, when it is concluded, as has been often declared in code states, that set-off is embraced in the term counterclaim. New York, California, Nebraska, North Carolina and other states have construed substantially these same provisions. In St. Louis National Bank v. Gay, supra, under similar facts, the court said:
"Counterclaim,' as used in our Code, includes both recoupment and set-off, and is, strictly speaking, a pleading by which matters arising out of recoupment or set-off are averred. It may be used by defendant to plead as against the plaintiff: (Code Civ. Proc. § 438.)'
Set-off was allowed under facts similar to those here presented in Cole v. Stearns, 20 Misc. 502, 46 N.Y.S. 238. The conflict between California and New York concerning these sections, as noted in section 166 of Pomeroy's Code Remedies, has to do with the time set-off accrues under their respective provisions. They are in harmony upon the proposition under consideration. In Harris v. Burwell, 65 N.C. 584, the court, commenting on a provision like section 4 of our Code, said:
'This language is as broad as it can well be; so that a note assigned after it is due, a half dozen times, will be subject to any set-off or other defense that the maker had against any one or all of the assignees at the date of the assignment, or before notice thereof.'
In Edney v. Willis, 23 Neb. 56, 36 N.W. 300, a like conclusion was announced:
In La Due v. First National Bank of Kasson, 31 Minn. 33, 16 N.W. 426, construing a statute upon the subject of set-off, the court said:
The note in suit was assigned by the payee after...
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